How product companies must look at innovation within their product
Sundays should be for reflection and me-time. And newsletters of course. I get my weekly dose of newsletters on weekends. This is when I go through everything saved in my inbox and read through everything that piques my interest.
Sharing my top 3:
There has been a lot of chatter about an investment winter and focussing on bottom lines and optimisation. I felt this was the right moment to talk about one of the biggest techniques to build frugally, for a competitive product. So today, I’m letting you into something you might have heard of or are already doing. But this is my personal experience on working on product innovation.
Also, if you are wondering how and why this one came into your inbox, you’ve either signed up recently or someone has added you to it. In either case, you’ll have a blast in here. I write once every 2 weeks and these newsletters are read by some of the most high growth consumer businesses. No ads in here.
On to the crux of what we’re talking today: Product Feature Fit
Most product teams struggle to find their product-market fit. While there’s a tonne of literature out there on finding your own PMF, I’ll go one step ahead today.
You’ve launched your product.
You have an audience.
There’s some activity on your DAU’s & MAU’s but now you’re thinking about growth.
There are two ways to go about building growth:
- you acquire new users, test new markets and increase your TAM
- you build new features that start to improve your overall product metrics
Well, if you were thinking that you have to work on either of the above, your product will start losing to competition very rapidly. While acquiring new users is going to get you top line growth, it's a new feature addition that’s getting you the desired retention, monetisation as well as MOAT.
At Lights Out, one of the biggest challenges we tackle with high-growth products is retention. And more often than not, it’s product innovation that we’re focussing on.
So let's dive into building a case for launching new product features.
Difference between PMF (Product/Market Fit) and PFF (Product/Feature Fit):
Classic Case for PFF within Product Companies:
It’s ideal for product companies to have independent pods or sub-teams within to try and test for new PFF’s within the overall product. This means that you treat each feature as an independent product in itself.
A classic case emerges when your new feature starts to attract its own set of customers and retain them, while not making any positive impact on the overall acquisition & retention of the product in itself. This means:
- You’ve hit a product-feature-fit with a small set of users that are attracted to your overall product
- Try if the users who come to the product for this feature, are loyal to just this feature or to the whole product (you’ll get this by slicing user activity by modules)
- Test if these users are willing to cross a paywall (not necessarily paid) to access this particular feature
You should let this experiment continue even if it doesn't really move any product level metrics, as long as it’s hitting positive metrics. At some point, it would start to add to your product’s competitive moat.
Let's take some examples from the Indian startup ecosystem:
- Cult’s application started to use the product to access other gyms beyond its own centres. What started as a pilot for Cult to onboard other gyms on its application (or ecosystem) then became a huge competitive moat and a user acquisition strategy.
- Cred’s ‘Mint’ started as an experiment with a small team within the company, with beta access to some of it’s core users (where you could invest upto as small as a few thousand rupees into the platform). Over time, it became a dominant force within the product and now has a minimum investment limit of 1L.
- Paytm’s ‘Sound Box’ is another example of how a feature within the product got it’s dominance on not just retention metrics but also started to acquire new customers.
Tactically, things to note while building PFF’s:
- It should be targeting ONLY a small percentage of existing users within a product and not new users. It’s a strategy to be tested with a subset of the audience of your product and not new market acquisition.
- Don’t market this feature on your product. Give beta access via email to a select set of users. If you were to add a banner on your homepage, it kills the purpose of trying to be selective with your audiences.
- Give each new feature enough time to take its journey, like you would to your overall product. As long as it’s not costing more than the cost of human capital, it should work for you.
- Get a lot of primary user feedback on why this feature works for them. You may feel it’s working because people are using it but ‘retention’ here will be a key metric. You MUST be able to draw users back, consistently to this particular feature.
Building a framework to test new features can be daunting, but it’s certainly worth the investment. It may end up becoming the identity of your product over time.
Until next time,
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